Ukraine's government resigned Tuesday and parliament scrapped anti-protest laws in major concessions to the opposition as Russian President Vladimir Putin warned against foreign meddling in the former Soviet state.
Giving in to opposition pressure and protests that have spread far beyond Kiev, Ukrainian Prime Minister Mykola Azarov said he was quitting to preserve the unity of the country.
Azarov will be replaced in an interim capacity by deputy prime minister Sergiy Arbuzov, a fellow Yanukovych loyalist, while other ministers will stay on until a new cabinet is named.
It was not clear who would succeed Azarov as prime minister, although some analysts floated the idea that a pro-opposition tycoon, Petro Poroshenko, might step into the post.
World boxing champion and opposition leader Vitali Klitschko said the announcement of Azarov's and the government's resignation was "not victory but a step to victory".
Parliament also on Tuesday overwhelmingly voted to repeal the same contentious anti-protest laws it had approved just two weeks ago, a move that had re-ignited the crisis.
The protests began in November as a drive for EU integration after Yanukovych under Russian pressure ditched a key deal with the bloc.
They have since snowballed into a wider movement against his rule, spreading into his heartland in the mostly Russian-speaking east.
Attending an EU-Russia summit in Brussels two months after the tug-of-war between the two blocs ignited the crisis, Putin warned his hosts against meddling.
"The more intermediaries there are, the more problems there are," he said, even as the EU sent its foreign policy chief Catherine Ashton to Kiev, bringing her visit forward by several days.
The Kremlin leader also emphasised that Russia "will not" review its $15-billion (11-billion-euro) bailout for Ukraine whoever is in charge in Kiev -- a relief for the economy, which is hugely reliant on the credit.
"Russia will never interfere," Putin said.
US Vice President Joe Biden spoke to Yanukovych for the second time in as many days Tuesday and welcomed "progress made today" in meeting some of the opposition's demands.
Later Tuesday, President Barack Obama, in his annual State of the Union address, called for the views of pro-democracy protesters to be heeded.
"In Ukraine, we stand for the principle that all people have the right to express themselves freely and peacefully, and have a say in their country's future," Obama said.
Lawmakers to debate release of protesters
Yet the dramatic twists in the crisis do not spell an end to Ukraine's crisis as two central opposition demands -- the release of jailed protesters and early elections -- remain unresolved.
Lawmakers are to gather again on Wednesday to debate the release of scores of protesters.
The presidency earlier said it wanted to make the amnesty conditional on protesters vacating official buildings they have seized and occupied and taking down their barricades.
The opposition has ruled this out and wants Yanukovych to bring forward to this year a presidential election scheduled for early 2015.
"We are here so that the president also resigns to change the system of power in the country," said Vasyl, 49, from the Ivano-Frankivsk region of western Ukraine, one of the protesters camped out with thousands of others on Independence Square in central Kiev.
Militants remain camped out in the sprawling military-style enclosure that has taken over much of the city centre and is surrounded by barbed wire and barricades topped with pikes.
Jailed former prime minister Yulia Tymoshenko, said Tuesday's concessions were the "first real result from the fight of people who took to the streets".
But she added: "It is not enough. Do not stop!"
Biden called for compromises "that can bring political unity, win the confidence of the Ukrainian people, and take Ukraine in the direction of Europe by strengthening democratic institutions and making the reforms necessary to achieve economic prosperity."
There is still concern for Ukraine on the economic front. Standard & Poor's on Tuesday downgraded the country's credit risk rating by one notch to CCC+ from B-, citing political instability.
Western leaders were mostly cautious, with German Foreign Minister Frank-Walter Steinmeier saying he hoped Azarov's resignation was a "signal" for further dialogue.
Swedish Foreign Minister Carl Bildt, a prominent critic of Yanukovych's actions, said on Twitter he "warmly welcomed" the moves by parliament and was hoping for more steps.
Canada, which has a large Ukrainian minority, praised the courage of protesters and on Tuesday said it would refuse entry to any government officials linked to the crackdown.